Social psychological reseach on race and prejudice has focussed on the nature and structure of stereotypes and prejudicial predispositional attitudes. This report deals with two topics which have heretofore received little research attention. The first issue concerns a cognitive processing basis for the development of stereotypes. It is hypothesized that an illusory correlation resulting in stereotypic judgments can be based on the way people process information about pairs of events which occur with differential frequency. Supporting results are reported and further experiments are proposed. The report also discusses sources of psychological discomfort experienced by whites in biracial interaction, and how this discomfort may result in a white's differential response to black and white others in a first encounter. Two experiments exploring the implications of this viewpoint are proposed.